Homeowners insurance policies are complex and meant to protect different assets against a wide array of potential perils
. Homeowners insurance policies tend to work much like a package deal, offering different areas of protection for different parts of your home, such as external structures. Does having this extra protection for structures such as sheds increase the amount you pay monthly?
How homeowners insurance policies work
Homeowners policies don't just protect the structure of your home—they are designed to cover a lot more. In fact, most homeowners insurance policies include the following areas of protection:
Loss of use or additional living expenses
Medical payment to others
The main element will always be the dwelling portion of your insurance. Why? Because that dictates the coverage you get for everything else. While the dwelling coverage limit is based on a monetary amount, the following items on the list are determined as a percentage of the dwelling coverage.
For example, most of the time, other structures coverage is 10% of the dwelling coverage. So, if your dwelling coverage limit is $300,000, this means that your other structure coverage will be $30,000.
Will adding structures to my home make my premium increase?
As you may have guessed by now, any extra structure that stands in the perimeter of your home but is not part of the main building would be covered under "other structures."
Because this coverage is a percentage of the dwelling coverage, adding new structures will not alter your monthly premium. However, be mindful that "other structures" coverage covers more than just sheds. It covers things like:
So, the more you add to the list, the more you are stretching the coverage. There may be a point where your basic coverage won't be enough to cover all of your external structures.
Can I alter my other structure coverage?
The only way to modify your other structure coverage is to increase or decrease your dwelling coverage.
So, if you think that $30,000 may no longer be enough to cover all of your external structures, raising your dwelling coverage will increase the coverage amount for them as well. However, keep in mind that this will most likely raise your monthly premiums.
Can I eliminate my other structures coverage completely?
Insurance companies design the policies the way they do for a reason, and chances are they won't let you eliminate any line item.
Because the price of most home insurance policies is based on a package deal, taking some things away from the policy would not decrease your monthly premiums—even if you don't have any of these structures.
The second thing you need to know is that most people do have external structures to protect, even when they don't realize it. Fences and driveways are part of things covered under "other structures" coverage, and this is something that most people have. Insurance companies know this, which is why they make it a permanent line item in their policies.
Besides, situations can change. While you may not have a gazebo or a shed at the moment, there's always the possibility of you adding one later. And when you do, you'll know that it will be protected under your existing home insurance policy.
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